Yanis Varoufakis blows the lid on Europe's hidden agenda

[Music] professor yan is very focused thank you for speaking to us it's a great pleasure this is your new book adults in the room kind of a tell-all memoir of featuring secret meetings with larry summers people phoning you in the middle of the night threatening your stepson because you saying bad things about the bank secret recordings from euro group meetings why did you write this primarily because the story of greece should not really matter for the rest of the world this is too small it should matter for us greeks but it shouldn't really matter to you in sweden to the brits to the americans but it's greece is a little bit like the canary in the mine it died in order to warn the rest the miners down the mine that there was a systemic problem a methane leak let's say and the way in which the powers that be the liberal establishment which is now protesting donald trump and brexit and le pen and so on mishandled massively mishandled the greek crisis is indicative of the way in which the liberal establishment has lost the plot internationally after 2008. so the reason why it is in english and why i exerted so much effort in putting it together and not just publishing a greek book in greece about our country's problems is because i think that it's it's a universal story and it's also a kind of drama because very often i i caught myself in meetings with very powerful people who were caught up in a trap on their own making in a way that only shakespeare can relate the title adults in the room that comes from christine lagarde at some point she said that we need adults in the room in order to have a an agreement but it's an expression that she did not invent it's an expression that in a sense relates and reflects the contempt that the establishment has for the people they refer to themselves as adults and of course the children are the masses out there who supposedly are the the source of all legitimacy in a properly functioning democracy so sweden hasn't joined the euro we had a referendum in 2003 did we have a lucky escape absolutely why because the euro the idea of a common class is splendid but this particular common currency the way that it's been designed it is as if it was designed in order to first create huge capital imbalances capital flow imbalances inflate gigantic bubbles which then burst naturally and then once you you you have that you have depression in in parts of the in the deficit parts of the eurozone and deflationary forces creating the circumstances for uh bigots and xenophobes to rise up in the rest of europe this is the the architectural flaws is the reason why you should not have been part of it and we shouldn't have been part of it either so in your retelling of this story the greek bailouts it's not about northern europe coming to rescue the lacy greeks who've been dancing all summer like grasshopper not thinking about the future but it's about the eurozone rescuing french and german banks how well look it's very simple isn't it 2008 great financial crisis all the banks went bankrupt throughout the western world every single one of them in the united states the elites and the institutions are very pragmatic they got around the table and immediately pumped up the quantity of public money of dollars and effectively deflated the collapsed banks in europe we had created the central bank on condition that it's not allowed to do that so if your bank your central bank cannot reflate the inane and deflated banking sector and the banking sector is insolvent the only alternative is to shift quite cynically the losses from the books of the banks onto the taxpayers so the greek bailout was nothing more than a bailout for deutsche bank finance bank ben per paribas or citizens and other french and germans between them they had lent 200 billion to the greek state they were very insolvent because they had stuffed their boots with toxic derivatives from the other side of the atlantic and they had already been bailed out by the french and particularly the german government and mrs michael could not go back to the buddhist tag and demand another word of money for the same banks that she had just saved so it was packaged as an act of solidarity towards the lazy greeks which of course has to be to come attached with austerity strings you know tough love in reality this was money that went from the german slovak portuguese irish taxpayer to the greek state to go straight back to the french and german banks on conditions that guaranteed to shrink the incomes of the greeks that were not enough to pay for the old debts let alone for the new ones a 10 year old can tell you that this cannot end well because in the book you're you're very critical of this obviously but you also express understanding for why dominic straskar and christine lagarde even mrs merkel do this at the first instance understanding is not the same thing as excuse me or legitimacy i believe that whenever you talk to someone whenever you try to negotiate with someone you should try to see things from their perspective does not mean that you agree with them it does not mean that you excuse what they do but that unless you have this capacity to get into the shoes of the other person then you are not going to have a civilized discussion my discussions with christine with all these people were very civilized the trouble was that they did not have the political degrees of freedom to come clean about what they had done because they they had affected the crime against logic lending the largest amount of money in the history of capitalism in absolute terms not relative terms to the most bankrupt state in europe was a crime against logic especially when they did it under constitutional conditions of such harsh austerity that guaranteed the diminution of the incomes from which those loans of course they didn't expect to get their money back and but they could not bring themselves and they really want their money back well they wanted their money back but they wanted other things more than the money they wanted to preserve and maintain their own power structure uh in particular in our case given that we opposed them we got elected on a campaign to restructure the debt when they didn't want to restructure the debt uh if they had come to an accommodation with us a compromise a mutual compromise fine common common ground a mutually advantageous agreement they would have gotten more money back than they are getting now but spanish voters irish voters portuguese voters italian voters and ultimately french voters might have gotten ideas in their heads that they could have opposed lagarde merkel choi bleu land and so on and so forth and achieve a better outcome from the perspective of those who were you know in power at the time this was a nightmare and it had to be snuffed out so you mentioned logic from reading the book logic seems to be important to you you are sort of often angry about that they are people are being irrational in europe you can't speak economics at eurogroup meetings i mean you come in as an economist into sort of a very political reality but it's also been political over bureaucratically okay bureaucratic but often when reading this i was thinking why is he so surprised i wasn't surprised no i think that my leaders are surprised i wasn't surprised at all i was expecting this fully but i believe that it was important that you folks found out that in eurozone eurogroup meetings which is where all the decisions about fiscal and monetary policy are made economic discussions banned i don't believe that europe the average european voter knew that and i think that they're aghast at the idea that those who are determining their economic future are simply not engaging with economic reality reality for instance you know in the eurogroup uh at some point uh schwarzkopf schweible said to me okay so you don't like the four and a half percent primary surplus target of your country what do you want it to be and i said it's not what i wanted to be it's what it can be given the circumstances and you know that target has to depend on also on our investment policies the extent to which we can close the gap between savings and investment and of course the extent to which we can support exporters to close the gap between experts and inputs because those three numbers the balance of payments the the the budget balance as well as the balance between savings and investments those three have to to be in equilibrium and then two hours later there were there were these accusations against me all over the media that you've been lecturing was lecturing and the rest of the so on economics so economics is banned in the euro group now that should really cause a great deal of disconcertment everywhere but did you think that lecturing them on economics would work i didn't lecture them i answered the question okay remember the question was if you don't like four and a half percent primary service would you like it to be and i answered the question i could not answer the question in any terms other than economic um i was not elected by my electorate in order to be a complete fool in the euro group because if i had answered in any other way i would be a fool look let's be clear the reason why i became finance minister is because sometime 2011 when i first started chatting with the man who became prime minister in the end my friend alex stephens i want him i said to him the moment you get elected i at the time i never imagined that that would be part of any government let alone his but this was a piece of advice as an economist i said the moment you get elected there will be no discussion the trigger will threaten to close down your banks and snuff you out because i was predicting what i experienced and then and he sort of panicked and he said so what should i do if i get elected and i started putting together a plan for how to deter the bank closures and how to force the troika to accept the basics that were necessary for greece's recovery and because alex sippers agreed with my proposals at some point he said well i agree with your proposals but i don't have anyone in the party to implement them i want you to be the finance minister then i had a moral crisis a moral crisis as to whether i should accept or not and i decided to accept it and the rest is history as they say yes so the surplus targets of 3.5 no country has ever managed to maintain that in the long run yeah exactly um did you get the impression that the troika believed that greece would be able to do this they did not care they did not care well firstly the imf agreed completely and utterly with me from the very first that is very clear from the book yeah and they even say this now in public back then they were not saying in public they were saying this to me personally now they actually advocated they are campaigning for exactly what i was campaigning for precisely to the last decimal point i was saying not four and a half not three and a half one and a half and this is the position the formal position of the imf today it's a vindication with no value to me uh vulcan schweible you can read in the book our exchange in which he in the end he took months of discussions in the end he said to me you're right this this this program is very bad for your country you shouldn't sign it yeah but his view was that in the context of the power play within the the north of the eurozone primarily between berlin and paris he would not be willing to reconsider the greek program even if it was a sensible reconsideration because he was worried that that would be a signal to paris that paris could expect more leniency from berlin and the view was very simple from berlin from chile in particular if they want the euro the french human they've got to accept that i'm going to veto their budget and so this was collateral damage purely qualitative damage we were being forced into a program that surely knew was bad for us and therefore he knew he wouldn't get his money back from from us because he was signaling to paris a degree of inflexibility now if you start if you if anyone tries to manage the macro economy of europe in this way you end up with a mess we have and the rise of le pen and the alternative for deutschland and the loss of uh credibility and trust amongst the european voters regarding the establishment because christine lagarde also tells you at a quite early stage that this program can't work but she still goes into this meeting and for five hours basically argues for the program so you have all these people saying one thing doing another now you're a game theorist can you model this this kind of behavior you don't even need game theory to model this behavior because christine explained this to me perfectly well yeah she said to me this program can't work but janice we've put so much political capital in it that we can't go back uh this is a like a pre-commitment and you have she was telling me instructing me you have to accept this and i said no no i don't because you know i was elected with a promise to my electoral not to accept something that makes no sense so you don't really need game theory for that it's it you need you need to reach shakespeare yeah macbeth macbeth commits a crime and then he just needs to commit a second crime to cover up the first crime and then the third one to cover up the second one so the more you commit crimes against logic in this case uh the more you get entrenched into a big lie so mrs merkel for instance when she lied to the bundestag in 2010 saying this this money this word of money is for the greeks to help them and that we will get our money back with interest she was not believing that at the time was she but once she made that statement she was caught in the trap that she had created for herself and then it was impossible for her to go back and ask for the letter structure given that she had promised her members of parliament firstly that this was money for greeks it was not it was for deutsche bank and secondly that there would be no debt restructuring but you are trying to beat this down with logic and rational economic argument shouldn't you somehow have been more aware of the political reality i mean were there any political conditions where sort of germany could forgive greece's debt allow me to say that not for one second did i believe that the power of reason and persuasion would prevail not for one second you still kept going in there for five months of course i kept going there and and one has to speak the language of reason so you knew you were going to lose no i knew that we would lose if we didn't have a deterrent you need two things you need sensible proposals and the deterrent when they try to crush you and your deterrent was greece leaving no not in the slightest firstly the greek state still owed 27 billion to the european central bank these were bonds that the ecb had purchased in 2011. now the main weapon i had was the threat that if you close down my banks to asphyxiate me which is what they did i will immediately restructure these 27 billion which were payable in the next two years i'm going to delay payment by 40 years now why was this important 27 billion is not that much money for the central bank of europe but legally it was a major made it was a nuclear weapon the reason is this the only reason why uh the euro survives today is quantitative easing the fact that draghi since march 2015 has been printing anything between 60 and 80 billion a month purchasing bonds and other kinds of debt now you may recall that jens weitmann the president of the buddhist bank was adamant against qe and its precursor the so-called omt program so much so that he personally representing of course the buddhist bank took the european central bank to the constitutional court of germany in contrary and asked the constitutional judges to deem these bond purchases by the ecb illegal and in violation of the german constitution this is a very big charge the jen's vitamin submitted 121 pages of it the position signed by himself against this now of course the judges did what the judges do in this circumstance they decided not to decide because it's just too difficult for them to make this decision so they referred the matter to the european court and the european courts asked the you know summoned mr draghi who appeared in front of the judges and won the case against weidman and buddhist bank on the basis of a pledge and the pledge was that he would not allow any restructuring of any of the bonds owned by the acp this is why restructuring the 27 billion that of greek bonds which were written in greek law which in other words all they needed was a signature for me in order to restructure them unilaterally that would have blown up the qe program that kept the euro together this was a nuclear weapon that we had i never wanted to use any weapons against europe but if they closed down my banks i think it was completely legitimate to say that 27 billion well you can't have it so that was one part of it and in the end you were not allowed to use this one but but but we had the only reason why i accepted the ministry was because we shook hands with alexis cyprus and the leading team of syriza that it makes no sense for us for us to get elected this is going along with the gist of your question just with good arguments and the power of persuasion you're not going to get anywhere there's a whole wall of denial in the euro group and in the triangle but if you have the nuclear weapon as well uh the doomsday machine if you want to call it that then they will come to the table and i have no doubt that it would have come to the table unfortunately yeah this is where this unity brings defeat our government was disunited and members of the team signaled to draghi don't worry about varufai is we're not going to let him hack out those those bonds and from that moment onwards defeat was uh um but before that you were convinced that draghi would never let this happen i still am convinced he would not let it happen if i was allowed to do that it was only when dragon realized that we were not united in government and i would have had the rug pulled from under my feet that he closed the bank the banks so the greek finance minister now says that there will be negotiations about debt relief you know what we've been doing this now for seven years yeah for seven years i hear the same inanity for seven years we keep taking loans on the basis that are sometime in the distant future is going to be a data structure there's no doubt that there's going to be a debtor structure an unpayable debt does not get paid it's really very simple it's not a question of willpower it's not a question of ethics it's not in the bible yeah it would not be repaid if you're bankrupt you cannot repay your debt full stop so you need a debt restructure the only question of interest is is that that distraction going to come first and therefore giving an opportunity to the greek economy to recover with a reduction in tax rates reduction in the budget surplus targets and so on and so forth which is necessary to attract investment or is the patient going to die greece is going to be causalized as i say turned into a desert with all his young people having left becoming an old folks home and then of course at the end they will cut the debt because you know once the place is uh derelict they will cut the debt that that's now unfortunately my good friend uh euclid who succeeded me in in the ministry whom i know agrees entirely with everywhere that i just said to you and i am prepared to testify for this in any court of law or any forum for some reason that i cannot explain is now adopting the language of the tri kind of the lenders who say oh well you take more loans now and you impose more austerity and you shrink your incomes more and one day will restructure that well no sensible person believes it on this planet and i can assure you that euclid zacalotus who is saying this now in the ministry of finance doesn't believe it either i've known him for 30 years he doesn't believe it so imf becoming increasingly critical of how it acted so you see the imf doesn't believe it no yes uh do you think imf will leave the greek program nope no no why not the imf is in a right old mess unfortunately for a very long time now the leadership of the imf which is usually european don't really care about the imf they are interested in their own political careers in the future in europe and therefore they're utilizing the imf against the interests of the international community that should be using the imf for good you know for good reason for good causes because that's how you explain the imf's involvement in the beginning with dominick strascon caring about caring about his political career in france listen whenever i have a choice between explaining something on the basis of stupidity or self-interest i opt for the self-interest explanation dominique stolzkan was a very smart man so why did he push the imf into a program that violated the principles of the imf not because he couldn't see what he was doing but because he wanted to be president of france and to be president of france he had to save the french banks from their own folly and this is what happened so what about you didn't you do you make any mistakes we're all prone to stupidity and self-interest yeah what was your biggest mistake during these five months two large ones first one is that i accepted without too much criticism the policy the strategy of keeping our negotiating tactics under wraps everything i've been telling you now about the haircutting of the smb bonds and all that this was not something that we brought out there was a good reason for that or a semi-good reason that we by the time we got elected it was already a bank run so talking about haircutting the s p bonds of the ecb that would have sped up the the bank run but with the benefit of hindsight it was a mistake not to share this strategy this vision of the strategy with the peoples of europe not just the peoples of the people of greek greece but the peoples of europe that's one big mistake because in the end i i do believe i always believed in spanish and i believe in transparency even more whenever you want to do something your voters should know what it is that you're trying to do not only what your objective is but what your means are as well and this is where theresa may here in britain is very badly mistaken to keep her cards close to her chest the second mistake i made was to sign the um the application for the extension of the loan agreement uh towards the end of february we had a good agreement on the 20th of february in the eurogroup 20th of february greece our government would be assessed on the basis of our own agenda regarding reforms then a few days later the troika took this back and they turned us back to the old failed program at least verbally i should have said them well since you are violating the spirit and the letter of the 20th february agreement i'm not signing this extension of the loan agreement i've i hoped that our government would remain united and we would simply be buying time to give the creditors more of an opportunity to honor that 20th february agreement i was wrong i should not have signed it and that would have meant that the bank closures would have come towards the end of february towards the end of june and one way or the other there would have been a resolution much earlier so you're mentioning there was already a bank run when you got elected because some people would say that greece was recovering in 2014 and it was only kind of you coming in and picking a fight with the creditors that then sort of made the problems worse again but i can say that the earth is flat it's just as credible greece was fading it's been fading since 2008. just just go to any databank and look at greek gdp nominal gdp in euros you see that it it it fell in 2009 2010 11 12 13 14. every year it fell what happened was it was a real gdp growth in 2014 but you know why because real gdp as you know is a ratio gdp in euros nominal gdp divided by an index of prices what happened in 2014 was the prices were falling faster than incomes and therefore the ratio was going up because the denominator was falling faster than the numerator but that is not a sign of recovery that is a sign of huge depression when prices fall faster than incomes after seven years six years of a decline in incomes this is you are in the depths of depression to have the international press saying oh chris was was recovering when these people walked into government this is just absurd and you know what it's also offensive to the greek people the greek people didn't want to elect us they did not suddenly become left-wing we were a party of four percent and then we went to 40 why did that happen because the greeks could see that nothing was working the people of great greece are much wiser than uh foreign correspondents except of course you of course they they chose us because uh what we said made made sense and there was no recovery the recovery was greek cavalry as i used to call it the greek success story was just adding insults to the injury of the greeks so who is who's the bad guy in this story because you you are quite understanding you get along with george osborne the british firemen as funnest minister even wolfgang schauble who was portrayed in the media as your arch enemy you know towards the end of the book you you get you get along or sort of you have good discussions who's the bad guy no one no i i try to write this book uh with a humanist perspective if you you know when you watch an ancient greek tragedy idibus who is a bad guy there are no bad guys everybody is doing trying to do their best but that's the whole structure of a tragedy the game is set up in such a way that even though everybody's trying to do their best in the end everybody is contributing to disaster so this was exactly how i tried to write this book i have no doubt that vulcan schweibert was trying to do his best christine lagarde was trying to do her best my prime minister was trying to do his best but in the end the game we play in europe is bringing out the worst possible outcome for our people and even powerful men like you know vulcan schreiber or women like angela america in the end they are caught in the trap of their own power and end up powerless this is the stuff of true tragedy so how do you change europe from being the stuff of true tragedy to something else by democratizing it you see democracy is not a luxury for the creditors it's not something that's nice to have the reason why democracy evolved never perfectly and nowhere perfectly is because it's the only way of managing a crisis you see during the good times you don't need democracy you can have a cartel structure like europe always did europe is a cartel really of heavy industry that's how it started remember it was the economic community of coal and steel like opec um and then the other other industries were corporate and agricultural sector through common agricultural policy so when you have the united states of america minding the global shop and ensuring that there is growth internationally which is what was going on between 1945 and 2008 really in the global economy and then you can have an undemocratic european union expanding and everybody's relatively dissatisfied and relatively happy at the same time and the whole thing is is sustainable i mentioned opec when is opec about to crash when prices come down during the bad times cartels cannot handle the distribution of burdens and losses similarly it is now since the crisis begun that you can see that the european union is desperately in need of more democracy because it cannot handle the distribution and redistribution of burdens that's when we need democracy and transparency it is absurd that the people out there do not know what uh their representatives are saying on their behalf behind closed doors and that's why you were secretly recording the eurogroup meetings under the table with your cell phone no that's not why i was doing it i was doing it for even better reasons than that after my first year which lasted ten and a half hours i exited that euro group meeting with a head that was spinning from fatigue from confusion from exhaustion now i considered myself to be and i was a representative of the greek people and the government in there the the future of the nation depending on what was being said during that meeting i was threatened by the president of the euro group with bank closures on that meeting in that during that very very first meeting now i had a responsibility towards my prime minister my cabinet my parliament and the greek people to come out and answer questions as to what was said in there and i remember once the press conference was finished i asked my secretary for a copy of what the transcripts of the minutes and she called me 10 minutes later saying uh minister i asked the secretariat and there are no minutes so it was for your own memory of course it was my only memory i had a duty to be able to report to parliament parliament parliamentarians would ask me you know this is what happens in democracy they say to yourself so what did soybeans say to you when you said that and what exactly what was the precise wording of what you said to schweible when it is a question of national survival for a place like greece and i had no idea i would have to say you know what i can't really remember i have a hazy recollection because i was tired so after that i started recording and then and then once the brussels correspondence began to spread huge lies about what was said to me about what i said in meetings recording my conversations was the only defense against this kind of toxic lies and it then became this book as well thank you

Channel: EFN

Views: 1,513,065

Rating: 4.8272157 out of 5

Keywords: Affärsnyheter, Nyheter, Ekonomi, Finans, Yanis Varoufakis, Greece, EU, Politics, IMF, Europe, Katrine Marçal

Id: nGt82RFfg3U

Length: 32min 22sec (1942 seconds)

Published: Fri May 05 2017

Reddit Comments

[u/marshelby]

Daddy

[u/1i1throwaway]

BDE. I'd totally bang.

[u/suschi14]

King

[u/chacmadin]

Peak masculinity

[u/tsoiboy69]

My kind of man

[u/sh0t]

Met him once. A fan.

Read and commented on his books.

If you get into his stuff, also check out Richard Werner and Steve Keen.

[u/barbaric_sun]

hot boy

[u/boybach]

Pretty sound as politicians go, wish he wasn't such an EU apologist though considering what they did to Greece. Seriza as a movement was very interesting in what they attempted to do and it preempted the mass social democratic/reformist utopian movements we've seen emerging in UK, US , Spain etc

[u/h_belloc]

good but diem25 seems like a bit of a vanity project sadly